Morningstar to offer new research on 529 plans

By Associated Press
Posted June 24, 2010 at 12:07 p.m.

Morningstar Inc. is unveiling new research tools designed to simplify the task of weeding out the plans that have gotten increasingly complex even as they become more popular for their tax breaks.The tools will go beyond Morningstar’s annual listing of best and worst state-sponsored investment funds for college expenses. They will provide more detailed data on 529s in all 50 states and ratings on the company’s one- to five-star ranking scale. That should help enable families to make appropriate choices without having to sift through a vast array of investment options as well as make them more aware of the fees plans charge.

“Making this investment choice for your child’s college tuition is a big choice for parents,” Laura Lutton, Morningstar’s editorial director of fund research, told reporters at the company’s investment conference Thursday. “We just want to give them better tools.”

Morningstar will assign each 529 plan to one of 25 categories based on the age of the child, risk level, type of investment and whether it has a low, medium or high percentage devoted to stocks. That is designed to provide a more focused comparison against a plan’s peers.

Every plan will be given one of five ratings — top, above average, average, below average or bottom. Those with at least three years of performance data will also receive a star rating.

The new research and data will be available in September.


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